On September 11, sources revealed that the Bank of Japan is expected to raise interest rates next week, most likely by 25 basis points, and may indicate a faster tightening pace if inflationary pressures increase. Raising rates to 1.25% would mark the highest policy rate for the Bank of Japan in 31 years. The move comes just three months after the last rate hike in June, signaling an acceleration in tightening measures. Many within the central bank believe that as the economy enters a moderate recovery and price pressures build, the conditions for another rate hike are becoming favorable. The central bank also anticipates that even if rates rise to 1.25%, financial conditions will remain accommodative. The market is closely watching Governor Ueda's comments after the meeting for any clues regarding the future pace of rate hikes and the potential peak rate in this tightening cycle. Sources indicated that the Bank of Japan may have no predefined view on the terminal rate, which will depend on how past rate hikes affect the economy and the extent to which businesses pass on rising costs to households. There is also no consensus within the Bank of Japan on the speed of rate hikes. Ueda is expected to avoid committing to a specific timeline for future rate increases but may reiterate the July statement that if financial conditions are deemed too loose, the Bank of Japan may accelerate rate hikes.